"Is ASIC concerned about a public perception of ASIC negotiating and reaching consensus with financial services entities about appropriate sanctions for their misconduct?" Ms Orr asked.

"Yes, I'm aware of that public view," Ms Macaulay admitted.

'Deals done behind closed doors'

There is history. ASIC signed undertakings with the Commonwealth Bank and NAB in 2016 for rigging the foreign exchange market, and signed another one with AMP more than ten years ago for overcharging clients.

As the royal commission has highlighted, no-one took much notice.

Swinburne Law School corporate governance research fellow Helen Bird said there are concerns about "regulatory capture", where the enforcement agency is in thrall to the institutions it is meant to be watching over.

"From the viewpoint of the public, they appear to be deals done behind closed doors, between regulators and parties," she said.

"We don't see what goes on inside those rooms."

The number of enforceable undertakings has recently been sinking, from 22 five years ago to just seven in the most recent financial year.

ASIC is increasingly pursuing civil cases, and experts say that is because regulators are concerned about being seen as a soft touch.

'Punishment doesn't fit the crime'

Associate professor Andrew Godwin of Melbourne Law School said the undertakings are cost-effective when it comes to achieving compliance and enforcing the rules.

"But the question is whether it's significant in changing the mindset and changing the culture of institutions," he pondered.

"The public thinks the punishment doesn't fit the crime — and that's fitting when you see the huge profits the banks are making and the disproportionately low amounts they seem to be paying pursuant to these undertakings."

That gap was exposed when the Commonwealth Bank was forced to refund nearly $120 million it took from customers in the "fee-for-no-service" scandal detailed at the royal commission. The fine was just $3 million.

In February the bank reported a half-year cash profit of $4.73 billion.

In a statement, the regulator defended its decision.

"Bearing in mind the scale of the penalties imposed, the payments made to consumers affected and related circumstances, ASIC determined $3 million was an appropriate community benefit payment for ... CBA for their [fee-for-no-service] conduct as set out in their respective [undertakings]."

Fines mainly go to financial literacy programs

The $3 million goes to financial counselling and ethics organisations, and groups helping specific parts of the community, such as seniors.

Not-for-profit group Financial Literacy Australia (FLA) receives the majority of undertaking fines, using the money to teach consumers about finance.

In a sign of the cosiness within the banking industry, one board member of FLA is the Commonwealth Bank's Linda Elkins, who was grilled about the scandal that led to the $3 million fine, and forced to admit the bank was the "gold medallist" in fee-for-no-service claims.

Another FLA board member is Craig Dunn, who was AMP's chief executive between 2008 and 2013 when much of the fee-for-no-service conduct occurred, and who is currently a non-executive director of Westpac.

Features

Former treasurer Wayne Swan says that real private sector wages have grown by just 1 per cent under the Abbott and Turnbull governments, which he says equates to only one year of growth under the previous Labor government.